Predicting international tourist arrivals in Greece with a novel sector-specific business leading indicator

We introduce a novel tourism-specific business expectations sentiment index and explore whether it can operate as a leading indicator for international tourist arrivals in Greece. Using monthly data spanning 2002-2021 and employing a VAR model, we document that this newly introduced tourism-specific business expectations serves as a leading indicator, whose higher levels foreshadow increased demand for international travel. We also find that its inclusion in a tourism-oriented model increases forecasting accuracy, which can be utilized by travel agent businesses, local government officials and policymakers in their efforts to predict tourist arrivals in Greece.